LTE: Emerging new tariff models expected to drive service adoption

Although LTE services continues to advance with increased network deployment, improved network coverage and expanded device portfolio, consumers' reception remains lukewarm as telcos fail to lure users to upgrade to the more expensive LTE plans. To address this issue, providers started diversifying their LTE price points and entry-level LTE packages. These new price strategies replace telcos’ initial LTE positioning as a price premium over 3G (previously, telcos placed LTE as the most expensive mobile package). Additionally, with the proliferation of new packages, some providers also started offering LTE value-added services (VAS) hoping to have a sort of killer app, which will drive the adoption of the service.

Relevant examples pushing this strategy are LG U+, SK Telecom and Vodafone. These telcos started bundling LTE with music and video streaming, cloud gaming and IP-based communication services (e.g. instant messaging, VoIP) to increase the attractiveness of their LTE offers. These VAS are quite bandwidth-intensive, thus concretising the real value proposition of LTE versus 3G connection.

These value-added services are offered either as add-on subscriptions — which may be limited to LTE subscribers only — or as a free service to premium LTE subscriptions. — and provided through exclusive access to app stores with differentiated multimedia contents.

This emerging strategy is, so far, in its early stages and detectable only in advanced LTE markets (e.g. Japan, US, South Korea). However, it is expected to impact the LTE service adoption and stimulate a more voracious data consumption attitude.